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Jersey Announces Further Improvements To Trust Regime

by Jason Gorringe,, London

22 December 2006

Jersey’s finance industry is consulting with the regulator and authorities on further enhancements to its Trusts Law, which it hopes will be introduced towards the end of next year.

Finance and legal professionals who attended the recent seminar on the trust sector in London, organised by Jersey Finance Limited, were given first details of the proposed changes by Advocate Steven Meiklejohn, a member of the Industry Working Party in Jersey, who was one of the speakers at the seminar.

The enhancements under consideration include:

  • The introduction of a statutory lien in favour of trustees in respect of liabilities the trustees would have been entitled to be reimbursed for, had they still been trustees. This would help clarify the position of former trustees when claims are made against them after their retirement.
  • The insertion of a provision into the Law stating that in relation to a non charitable purpose trust, the mere holding of the shares of a company represented a valid purpose. This would be beneficial in the context of a purpose trust holding the shares of an underlying private trust company.
  • The possible reformation and re-statement of Article 21 of the Trusts (Jersey) Law 1984 insofar as it relates to a trustee’s duty in respect of investments, so as to more closely follow what is known as the ‘prudent investor’ rule in the US and in a number of Caribbean jurisdictions.
  • The insertion of a modern flexible definition under Jersey Law of a ‘charity’ or ‘charitable purpose’.

It is also hoped that consideration can be given to possible amendments to the principle by which beneficiaries are entitled to know they are beneficiaries of a particular trust, such that in respect of minor beneficiaries it would be possible to prevent them from being told they were beneficiaries should a settlor wish it. Such a change would reflect the law in a number of US states.

Commenting on the move to address the issue of liabilities of former trustees, Advocate Meiklejohn added:

“Without possession of the Trust Fund, a former trustee has no clear right to reimbursement in respect of liabilities for which it could be indemnified if it had remained trustee. The provision of a lien in the trustee’s favour would entitle the trustee to be indemnified in respect of such proper liabilities from the Trust Fund in the new trustee’s, or even a beneficiary’s, hands."

“We are in the early stages of consultation but the intention is to present a Trusts (Amendment No.5) (Jersey) Law to the States of Jersey in 2007 for approval and then obtain Privy Council consent towards the end of the year.”

The recent seminar in London highlighted the changes that had been introduced this year by the Island’s legislature through the Trusts (Amendment No.4) (Jersey) Law, which included the introduction of settlor-reserved powers. This rule provides greater control and certainty regarding the level of control and influence a settlor may exercise over the ongoing administration of assets placed into trust, and several additional measures which will encourage more high net worth private family trust business to be administered in Jersey.

Beverley Le Cuirot, Director of Marketing, Jersey Finance Limited, the promotional arm of the finance industry, commented:

“The Trusts Seminar in London was the Industry’s first dedicated solely to the trusts sector, and was supported by both the Jersey Association of Trust Companies (JATCo) and the Jersey Bankers Association Trusts Group. It attracted well over 250 delegates, with more than 180 from London, and initial feedback has been excellent."

“As well as highlighting the key benefits of the Trusts Amendment No. 4, including clarity of interpretation and simplicity of use, the event comprised a debate style formula providing an opportunity for Jersey trusts practitioners and London lawyers sitting on the panel to address some important issues affecting the industry both in Jersey and globally."

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